QUESTION 1 Scenario: Tobac Co is a monopolist in the cigarette maket in Nicotian

Question

QUESTION 1 Scenario: Tobac Co is a monopolist in the cigarette maket in Nicotiana Republic, where the U.S dollar is used as the ofcial The firm has a constant marginal cost of $2.00 per pack The fixed cost demand curve is P 8-0.040, where Q is the quantity demanded (in milions of packs) and P is the price per pack (in S) Also, you should draw in the marginal revenue curve. currency. The firm faces the demand curve shown below of the firm is $50 million. To answer the questions below, it is useful to know that the equation of the (inverse) Price (S per pack) 10 MC D. 50 100 150200Quantity packs) the total cost is Refer to the scenario above If the quantity sold is 50 milion packs, then the firm's total revenue is and 5400 million; $200 million 5250 million; $100 million $300 million $150 million Click Save and Submit to save and submit. Ctick Save All Anstuers to save all answers save

Explanation / Answer

When quantity is 50 million packs then price is 6 and total revenue=P*Q=50*6=300 million

And total cost=2*50=100 million+fix cost=100+50=150 million

Ans is D

MR curve is half of demand curve i.e. P intercept will remain same and quantity intercet will be 100.

MR=8-0.008Q

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